The majority share of a fund set up with the intention of boosting the UK’s various regional economies has been left unspent by the government, a new report conducted by the National Audit Office (NAO) has revealed. Stating that there is still a ‘significant’ sum of cash to be apportioned through the Regional Growth Fund, the findings also reveal that, in vein of this lack of allocated spending, the cost of creating jobs has in fact increased in recent quarters.
Since the £2.6 billion fund was set up back in 2012, the amount of jobs created or safeguarded as a result have more than doubled- rising from 22,100 to 44,400. However, a mere half of the total has been put to active use.
Whilst around £492 million is believed to have reached projects nationwide, the remainder lies in wait- despite the growing intensification of the cost of living crisis among the country’s youngsters. The report goes on to state that as much as £425 million of the total is being held by various ‘intermediaries’.
‘A Significant Challenge’
Though the Business and Local Government Departments responsible for putting the funds to use have been making active efforts to speed up the process, it is being suggested that they face a significant challenge when attempting to do so as quickly as had initially been planned. Especially, adds the report, in light of the coming years’ £1.4 billion budget.
Launched with the intention of supporting private firms in various English regions which rely heavily on the public sector for employment, the fund has been looked on as a particularly progressive measure within the conservative government’s strict domestic financial policy. On the subject of the report, Business Minister Michael Fallon said: “The NAO report rightly recognises the steps we’ve taken to strengthen RGF by improving its governance and getting money into the hands of businesses more quickly to support economic growth.
“RGF is working. Over £2.6 billion of RGF investment has now been allocated to 400 local projects and programmes which is unlocking nearly £15 billion of private investment and delivering 550,000 jobs.”
‘Plagued by Chaos and Delay’
The report’s results are based on the initial four bidding rounds on the fund, which when combined project a total of £3.2 billion in spending. Toby Perkins, opposition Shadow Minister for small business, said: “To grow our way out of the cost-of-living crisis we desperately need to see better-balanced and sustainable growth across the UK’s regions, but the Tory-led government’s flagship Regional Growth Fund has been plagued by chaos and delay."
He continued: “A potentially valuable contributor to re-balancing the economy is being undermined by the ministers’ failure, meaning that more than a third of winning bidders under the schemes first round have now pulled out entirely while others have been left waiting almost two years to receive their money. This report highlights ongoing concerns over bureaucracy and delays in money getting out of the door to the businesses which need it and worryingly finds that hundreds of millions of pounds have been left gathering dust in government coffers. The RGF was set up to boost private sector growth in deprived areas but instead we are seeing areas and regions held back - ministers urgently need to raise their game."